PROVIDENCE — If the entire 40 percent of Rhode Islanders who rent their homes could do so affordably, close to $400 million per year would be freed up for other economic activity, according to a new report from HousingWorks RI.

Christine Dunn Journal Staff Writer ChristineMDunn

PROVIDENCE — If the entire 40 percent of Rhode Islanders who rent their homes could do so affordably, close to $400 million per year would be freed up for other economic activity, according to a new report from HousingWorks RI.

The nonprofit research group released its 2013 Fact Book on Friday. The report contains statistics on housing affordability in all 39 cities and towns in the Ocean State.

In Rhode Island, 40 percent of all households rent, while 60 percent own their homes.

Close to half of the renting households, 47 percent, are cost-burdened, meaning they pay more than 30 percent of their income on housing costs, including rent and utilities. More than a quarter of the renters, 26 percent, are severely cost-burdened, meaning they pay more than 50 percent of their incomes on housing.

For home-owning households, 35 percent are cost-burdened, and 15 percent are severely cost-burdened, according to HousingWorks.

“We know that households that spend more than 30 percent of their incomes on housing have little left over for non-discretionary items, let alone fully participate in their local economies,” HousingWorks researcher Jessica Cigna said. “But this is the first time we’ve been able to measure just how much money is not going into other parts of the economy, because it is being spent on housing that is not affordable.”

The HousingWorks analysis of U.S. Census data found that 90 percent of the cost-burdened renters in Rhode Island, about 70,000 households, earn $38,200 or less per year, and they spend an average of $885 a month on their rent and utilities. But their housing costs would be $407 a month if they lived in housing that is affordable to them.

“A more affordable home would put $478, on average, back into the hands of these lower-income workers each month,” the report added. So instead of spending $10,617 a year for housing, they would spend $4,887, giving them $5,730 more each year.

Statewide, “more affordable homes could lead to as much as $398 million circulated into other parts of the Rhode Island economy,” the HousingWorks report added. “By ensuring more affordable housing options for these households, Rhode Island can diversify its economy and support more local businesses.”

The Fact Book included an interview with Jody Sullivan, executive director of the Newport County Chamber of Commerce, who said that many workers in the local hospitality and tourism industries cannot afford the average rents in the area, “let alone save enough money to one day purchase a home.”

In Newport, the average rent for a two-bedroom apartment is $1,371, the median home price is $365,000, and an annual income of $98,414 is required to afford a $352,225 mortgage, according to HousingWorks calculations.

“When we have more affordable housing, we will have more people living in communities where they work, supporting local businesses, and strengthening the local economy,” Sullivan said.

In Providence, not including the more expensive East Side, the median home price, $90,000 in 2012, was more affordable, requiring an income of $33,439 a year, but a bigger income, $43,560, was needed to afford the average monthly rent for a two-bedroom apartment, $1,089.

While the median house price in Providence, not including the East Side, increased 26 percent from 2002 to 2012, average rent costs increased 37 percent in the same period, from $797 in 2002 to $1,089 in 2012, the report said.

On the East Side of Providence, the median home price was $449,100 in 2012, and the average two-bedroom rent was $1,313. (HousingWorks relied on data from the Rhode Island Association of Realtors for home prices. Rent data came from Rhode Island Housing.)

Cranston’s median home price of $167,000, requires an income of $53,588, but this is above both the average private sector wage in Cranston ($41,548) and the median renter household income ($32,414). Cranston’s average two-bedroom apartment rent, at $1,157, is affordable to incomes of $46,280 and above.

In Warwick, the median house price, $148,000, decreased by 1 percent between 2002 and 2012, HousingWorks reported, but the average rent for a two-bedroom apartment increased by 56 percent, from $841 in 2002 to $1,315 in 2012.

The HousingWorks report found that in 2012, a household earning $53,636 a year — the state’s median household income — would only be able to afford to buy a home in 11 of Rhode Island’s 39 cities and towns.

Only five Rhode Island communities — Central Falls, Newport, New Shoreham, Providence and Woonsocket — have met the state’s goal that 10 percent of their housing stock be long-term (deed-restricted) affordable. Scituate and Little Compton were the farthest from that goal, with less than 1 percent of their housing stock qualifying as affordable.